Why you should care that NYC’s unpaid interns can now sue

This past month, New York City Mayor Bill de Blasio signed a law extending the city’s existing human rights legislation to include unpaid workers. As of April, inappropriate workplace behavior – specifically harassment or discrimination — will no longer be tolerated, regardless of compensation earned. This decision is contrary to a federal judge’s ruling in 2013, when an unpaid intern was denied the right to sue for sexual harassment because she didn’t qualify for the same NYC workplace protections guaranteed to paid workers.

Similar employment law is pending in Oregon and Washington, D.C., with California also moving in the direction of guaranteeing a more professional work experience.

At the same time, employment lawsuits are burgeoning as for-profit companies are learning the hard way exactly what an “unpaid internship” actually means. Ignorance of federal guidelines is landing many firms in expensive hot water. An example: last June, a federal district court judge in New York ruled that Fox Searchlight Pictures should have compensated two (unpaid) interns for doing menial tasks during the making of the movie Black Swan. Why? The unpaid work, the judge ruled, would otherwise have required paid employees.

Huh? The Supreme Court defined the six criteria test for unpaid interns in 1938, all of which must be proven true for any private-sector unpaid internship:

The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

The internship experience is for the benefit of the intern;

The intern does not displace regular employees, but works under close supervision of existing staff;

The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

The intern is not necessarily entitled to a job at the conclusion of the internship; and

The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist, and in most places, then, workplace norms like set minimum wages and workplace protections are not mandated. The courts have more strictly defined the “intern” criterion in that an “intern” means a person who achieved the position through a formal university or college program. Again, take heed – Ivy league schools and many colleges no longer allow academic credit in exchange for free labor.

Once the Black Swan decision was announced, more unpaid interns expressed their own dissatisfaction for what many consider to be an apprenticeship program. One who worked for W magazine and another who worked for the New Yorker filed lawsuits against publisher Condé Nast for wages, as did a former Atlantic Records intern, who sued Warner Music Group. More suits are pending, and many, many more are expected.

Once the Black Swan decision was announced, more unpaid interns expressed their own dissatisfaction for what many consider to be an apprenticeship program. One who worked for W magazine and another who worked for the New Yorker filed lawsuits against publisher Condé Nast for wages, as did a former Atlantic Records intern, who sued Warner Music Group. More suits are pending, and many, many more are expected.

Note that it was a federal judge’s ruling to compensate, which sets a national precedent.

Bottom line: if your company doesn’t meet the six criteria, it’s cheaper to pay the upfront minimum wage than to pay back wages, lawyers’ fees and punitive damages – not to mention the incalculable cost of soiling a brand.

About Jody Glynn Patrick

Jody is President of Glynn Patrick & Associates, which provides management consulting, executive coaching and strategic planning services. She is Publisher Emeritus of In Business magazine, which she published for 17 years. Selected as the “U.S. Business Journalist of the Year” in 2007 in Washington, DC, by the U.S. Small Business Administration, Jody has been a business reporter, editor, radio talk show host , and has won other state and national journalism awards. At the same time, she has helped corporate clients grow their businesses -- the basis for her practical coaching advice here. She also was the 2005 Athena Award recipient for her leadership role in mentoring other professional women. Jody will be talking with you weekly on TDS’ blog to share her insights and tips from the C-Suite perspective. Follow on G+.

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